DUBAI (Reuters) - Iran will not stop higher-grade uranium enrichment in response to external demands, its top nuclear energy official was quoted as saying on Tuesday, signalling a tough bargaining stance ahead of planned new talks with world powers.

The West wants Iran to halt enrichment of uranium to a fissile concentration of 20 percent as it represents a significant step closer to the level that would be required to make nuclear bombs. Iran says it needs this higher-grade uranium to run its medical research reactor in Tehran.

Israel has threatened air strikes on Iran if its nuclear work is not curbed through diplomacy or sanctions, raising the spectre of a Middle East war damaging to the global economy.

Iran "will not suspend 20 percent uranium enrichment because of the demands of others," said Fereydoun Abbasi-Davani, head of Iran's Atomic Energy Organisation, the Iranian Students' News Agency (ISNA) reported.

Iran "will produce 20 percent enriched uranium to meet its needs and for however long it is required."

He did not specify what he meant by "needs". Western diplomats say Iran already has made sufficient amounts to fuel its Tehran Research Reactor for several years. Abbasi-Davani has in the past said Iran plans to build another research reactor.

The European Union quickly responded to Abbasi-Davani's comments, saying Iran must come to grips with increasing international disquiet over the ultimate purpose of its uranium enrichment programme to resolve the protracted dispute.

"Iran has to address the immediate key concern, which is the issue of 20 percent enrichment, by taking an initial comprehensive confidence-building step in this area, thereby creating space for more diplomacy and negotiations," the spokesman for EU foreign policy chief Catherine Ashton said.

In his statements, Abbasi-Davani signalled renewed Iranian defiance in negotiations with world powers expected to resume soon. But he did not appear to categorically rule out that Tehran at some point could shelve higher-grade enrichment.

The powers - the United States, France, Britain, Germany, China and Rusia - also want Iran to shut down the Fordow underground site where its 20 percent enrichment is carried out.

Nuclear expert Mark Fitzpatrick, of the International Institute for Strategic Studies, said about Abbasi-Davani's comments: "This hard line doesn't bode well for success in the next round of talks, where stopping the 20 percent enrichment is just one of the steps Iran will be asked to take."

BEHIND THE SCENES

But others suggested Abbasi-Davani's comments, and those of other Iranian officials, were intended more for public consumption at home and abroad.

"What matters is not stay-the-course statements like these but whether behind the scenes the Supreme Leader and his entourage, and the Obama White House, step out of their shadow and agree to direct bilateral talks," Mark Hibbs, of the Carnegie Endowment think tank, said.

Iranian foreign ministry spokesman Ramin Mehmanparast said Iranian and EU officials had held discussions regarding the time and place of the next negotiations between the powers and Iran.

"If there is an agreement, it will be announced," Mehmanparast said in his weekly news conference.

The EU spokesman said the six powers are still waiting for an Iranian answer regarding a possible date for new talks: "We made contact last week and suggested getting together for another round. We are waiting to hear the response."

Though Israel has threatened to bomb Iranian nuclear sites, Vice Prime Minister Moshe Yaalon said the Jewish state had noticed renewed U.S.-led efforts to curb Iran's nuclear work since President Barack Obama's re-election last month, including preparation for possible military action.

He also cited contacts among the powers and Iran about holding new negotiations and ongoing sanctions against Iran.

Iranian media quoted Foreign Minister Ali Akbar Salehi as saying that any calls for direct talks between the U.S. and Iran were meaningless as long as Washington continued to exert pressure on Iran through sanctions and other measures.

In October, the New York Times reported that secret exchanges between U.S. and Iranian officials had yielded agreement "in principle" to hold one-on-one talks. Both Iran and the United States denied that the two countries had scheduled direct bilateral negotiations on the nuclear programme.

(Additional reporting by Fredrik Dahl in Vienna and Justyna Pawlak in Brussels; Editing by Mark Heinrich)

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